Solar Power and Heat for Cheap? Tony Blair and Vinod Khosla Say Yes

A new solar array that creates both electricity and hot water made its debut at a California winery yesterday, in the presence of investors including venture capitalist Vinod Khosla and former British Prime Minister Tony Blair.

Both Blair and Khosla see a big future for Cogenra, a solar co-generation (producing both power and heat) company formed just 15 months ago with a scant $10 million of funding. With five times more energy production than photovoltaic technologies, Cogenera’s system may help traditional investors discover that the economics of clean energy are quite attractive.

“Climate change will not wait for the world to be ready for it,” even during a financial crisis, Blair said at the Cogenra event. Blair added that he’d told the same thing to disbelieving US officials, who tend to think that eco-efficiency and saving money is an either/or choice.

The generator at the Sonoma Wine Company in Graton not only produces power, but efficiently heats water for agricultural and industrial processing – saving fossil fuel expenses, ensuring supply and reducing price volatility.

Since cogeneration yields both electricity and heat (which combined account for 70 percent of energy needs in the United States), the Cogenra solar solution can drop heating bills as well as electric bills – especially for intensive users like food processors, pharmaceutical firms and the military.

To make it easy for customers to say yes – and avoid upfront capital investments – Cogenra is pioneering a Heat and Power Purchase Agreement. This approach provides a predictable discount to energy and heating expenses, says Sonoma Wine Company owner Derek Benham, who signed up with Cogenra months ago “on a handshake” and expects an accelerated payback versus a nearly decade-long payback on many solar-photovoltaic solutions he had considered.

The new business model, along with new technology, helped Cogenra win a coveted $1.5 million grant from the state Public Utilities Commission. The “Research, Development and Deployment (RDD)” grant is distinctive among government incentives for its systems-thinking approach: It encompasses the technology’s invention and also its implementation.

With potential applications in strong sunshine markets ranging across Texas, Nevada, New Mexico, Colorado and Hawaii, Cogenra CEO Gilad Almogy sees plenty of opportunities to save customers money and dramatically reduce both energy and heat usage. The initial roll-out for Sonoma Valley agriculture is benefiting from Silicon Valley technology. This first installation is serving 30 percent of the winery’s electric needs and about half of its heat (mainly hot water) requirements, but Benham expects to be “fully off the grid” in about three years. He expects to cover 30,000 square feet of roof with Cogenra’s systems. “We want to diversify our energy needs away from natural gas and oil – and make money doing it!” Benham says.

To be this affordable, Cogenra has worked with “off the shelf” standard products and a “low-tech” approach. The parabolic solar thermal design doesn’t require curved glass, but has layered flat glass panels in a parabolic shape – simplicity has conquered complexity. This drops the capital required to launch Cogenra to a manageable $10 million. “This is much more compelling than the $500 million that other solar companies have raised or collected grants and guarantees on,” says Pierre Lamond of Khosla Ventures and board chair of Cogenra. “You need to be super-efficient with capital to be commercially viable.”

Cogenra’s engineers were relieved that they achieved the aggressive timeline scheduled for the release of this first installation. However, the permitting process remains a key “speed limit” to faster implementations. Wildlife, water and environmental assessments and risk mitigation plans are required for many permits. For clean energy solutions to propogate, government and stakeholders need to be engaged early in the process. Thus, Cogenra’s breakthrough technologies also need a human-driven innovation – engaging the citizen groups and regulators early on in the deployment planning.

However, Cogenra CEO Almogy says that on-site commercial energy systems should lead to smoother permitting and potential standardization, like Solar Tech and the solar energy association are advocating, and Germany has adopted.

What have Tony Blair and Vinod Khosla discovered? Dedicated entrepreneurs with breakthrough innovations can land pioneering customers – who benefit with lower energy and heating bills, reduced fossil-related emissions, and create sustainable bottom lines – all while engaging the local citizenry in doing good for the climate.

Are investors and government regulators listening? The silent sound of solar power and heat is beginning to yield financial benefits, cleaner climate, and energy independence.

R. Paul Herman is CEO and Founder and a registered representative of HIP Investor Inc., (http://www.HIPinvestor.com) an investment adviser (registered in CA, WA and IL) and wealth manager of sustainability-focused portfolios, including the HIP 100 Index portfolio. His new book, The HIP Investor: Make Bigger Profits by Building a Better World (http://bit.ly/HIPinvestorBook), is published by John Wiley & Sons. All information presented is for informational purposes and are not investment recommendations.